EPA shows effects of carbon caps proposal

A proposal currently is in Congress to cut greenhouse-gas emissions by putting a price on carbon, a step a U.S. Environmental Protection Agency (EPA) study says could raise electricity prices by 22 percent and natural gas prices by 17 percent in 2030, according to The Wall Street Journal.

However, the EPA study shows that if the government takes the bulk of the money raised by a carbon cap-and-trade system and returns it to households, the effects on consumers would be modest. The average U.S. household would pay an additional $98 to $140 per year, which is 27 cents to 38 cents per day.

The measure from House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and Rep. Edward Markey (D-Mass.) proposes cutting U.S. emissions 20 percent below 2005 levels by 2020 and about 80 percent by 2050. Concerns have arisen regarding whether cutting emissions 20 percent by 2020 can be achieved; Rep. Rick Boucher (D-Va.) has mentioned an amendment that would give companies more credit for offset projects that cut emissions through actions such as preventing deforestation and says he is preparing more recommendations for amending the bill.

The EPA analysis of the proposal focused mainly on the carbon cap provision's effectiveness and projected costs; it did not address the effects of other provisions, such as those that would mandate energy-efficiency improvements by appliances and buildings. The analysis says there are uncertainties involved with the proposal that "could significantly affect the results."